Who Wants To Be A Millionaire?


Does being a millionaire seem like a far-fetched dream? What does a typical millionaire actually look like? The truth is, being one is actually more achievable than you might imagine.

There is a test done by Stanford University once, called the marshmallow test. The test is one of the most accurate indicators to predict future success in a child. Basically, the test teaches the children to delay their gratification and they will receive a far greater reward. That is essentially the same and most important attribute that we need to succeed in becoming a millionaire.

Let’s us just take a short example of a person who started working at the age of 22. She will start her career with a salary of $2,000 a month and able to save able 20% of her salary every year. To make it more realistic, we assume she will be able to get an increment on her salary of 3% a year until she topped her salary at $5,000 a month. If she is able to invest that savings and compound it at a 10% return a year, she will end up with more than $4.5 million by the time she retires at the age of 65.

Age  Wages  Savings  10% Return 6% Return
22  $  24,000.00  $    4,800.00  $          5,280.00  $          5,596.80
23  $  24,720.00  $    4,944.00  $        11,246.40  $        11,173.25
24  $  25,461.60  $    5,092.32  $        17,972.59  $        17,241.50



63  $  60,000.00  $  12,000.00  $  3,837,325.42  $  1,351,154.96
64  $  60,000.00  $  12,000.00  $  4,234,257.96  $  1,444,944.25
65  $  60,000.00  $  12,000.00  $  4,670,883.76  $  1,544,360.91


More importantly, even if she just earns 6% years on her savings every year, she will still end up with $1.5 million by her retirement age. However, that is the easy part. The hard part remains; will we have the self-control to stop ourselves of spending our savings along the way?

The next time you choose being saving and spending, your decision might have a much greater impact than you might realize. Happy Investing.



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